Watching Your Back in the Recession

Maybe your business is booming, despite the recession. I've heard from several freelancers who are in this happy situation, and I think it is true that in times of trouble, many companies can't afford to scale back their marketing initiatives. But some companies also can't afford to pay for their marketing initiatives. In this economy, are you seeing an increase in late payments, haggling and deadbeat clients?

I'm starting to see it. One large client I've worked with regularly is starting to get later and later on payments each month, while I completed a project with another regular client weeks ago--a client who usually paid same-day--and haven't heard a peep about payment. The bottom line? Your business might be doing well--but don't assume the same for your clients. This raises your risk of doing business with them.

In these economic times, it's more important than ever to watch your back and make sure you get paid. Here are a few precautions to take.

Ironclad contracts. Contracts are important no matter what economic conditions you're working in. But now may be a good time to have a lawyer look over the contract you're using to make sure it will stand up in court. Consider your contract delivery system as well; I recently had a lawyer tell me it's better to have an original signature on a contract than to rely on a faxed or pdf-emailed version. This can have an impact on businesses that operate primarily online.

Contact information. Make sure you have valid mailing addresses and phone numbers of all your clients. If someone goes deadbeat on you, you have more likelihood of putting pressure on them to pay if you know where they live.

Communication. It's easier for someone to decide to stiff a person they've never met or spoken with in person--they humanize you less. In these economic conditions, make sure your clients know there's a real person behind those emails. Conduct more phone calls. Visit offices in person when you can.

Up-front payments. I've started implementing a policy of 100% up front payments for new clients on smaller projects. This lessens my time spent chasing after little checks delivered months late. When I already have the money, the project is less stressful and as far as I'm concerned, clients can take as long as they like with revisions.

Be wary of everyone. Even your regulars may be suffering financially, putting your paycheck at risk. Watch your regular clients for signs of impending trouble. If your checks are starting to be delivered late on a regular basis, you may want to discuss an upfront payment policy or more rigid payment schedule.

What signs are you seeing that the recession is affecting your clients?